US Q2 GDP grows more quickly than expected

America's economy grew more quickly than expected last quarter as companies ramped up investment and amid inventory accumulation.

According to the US Department of Commerce, gross domestic product expanded by 2.8% in quarterly annualised terms during the second quarter.

That was up from the 1.4% clip observed during the first three months of 2024 and ahead of the 2.0% pace anticipated by economists.

Growth in household consumption picked up to 2.3%, after 1.5% in the first three months of 2024, while private investment was ahead by 8.4% on the back of an 11.6% surge in outlays on equipment.

Public sector spending also accelerated, to 3.1%, and inventory accumulation added 0.82 percentage points to growth.

The latter offset a 0.72 percentage point drag from net trade as imports raced ahead by 6.9%.

On the inflation front, the rate of increase in the price deflator for personal consumption expenditures slowed from 3.7% in the first quarter to 2.9% in the second.

Stephen Brown, deputy chief North America economist at Capital Economics, said: "The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent loosening of labour market conditions and signs of slower price growth still mean that there is a strong case for a cut at the following meeting in September."

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